At the Shanghai Cooperation Organisation (SCO) summit in Tianjin on 1 September 2025, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping met and publicly framed the relationship as “partners, not rivals.” Their readouts stressed dialogue on differences and cooperation on development—language that marks the clearest thaw since the 2020 Ladakh crisis.
Two moves gave the reset substance, not just optics. First, India and China re-activated the Special Representatives (SR) dialogue on the boundary question in New Delhi on 19 August 2025, and second, they agreed to restart direct flights and expand people-to-people and business links, after a five-year freeze. These are communications channels that reduce miscalculation and restore some weight to a battered relationship.
This reset unfolded as Xi used the Tianjin summit to push a more assertive Global South agenda—including accelerating an SCO Development Bank—explicitly challenging single-power dominance and sanction-driven globalization. For India, which has long sought strategic autonomy, a functional India–China channel inside the SCO is not a capitulation; it is leverage.
After the 2020 Galwan clash, New Delhi tightened tech and investment restrictions on China, while both sides forward-deployed troops and cut normal political contact. Through late 2024, however, working-level mechanisms (WMCC) and diplomatic engagements recovered modest momentum, including an October 2024 patrolling/disengagement understanding that lowered the temperature in parts of eastern Ladakh. Those steps—and Doval–Wang talks since—made a top-level political meeting viable in 2025.
No one should romanticize the moment: structural problems remain—an $99.2 billion trade imbalance, different readings of the LAC, concerns over water projects in Tibet, and third-country entanglements. But the policy choice before India and China is no longer escalation by default. In Tianjin, both sides re-committed to managing the border without letting it define the whole relationship, and to grow economic ties more deliberately (including flights, visas, and religious travel). That is an ideological and practical pivot from the 2020-2022 freeze.
SCO as a platform for global south coordination
The SCO is no longer a narrow security club. By Beijing’s own data, China–SCO trade reached $512.4 billion in 2024, and the grouping now represents nearly half of humanity and roughly a quarter of global GDP—a scale impossible to ignore. A proposed SCO Development Bank would add an instrument for infrastructure connectivity that is not indexed to IMF/ADB conditionalities and could complement the BRICS New Development Bank—precisely the kind of multipolar finance the Global South has argued for.
For India, this matters beyond symbolism. South Asia’s intra-regional trade is chronically low; regional capital for rail, energy, and border trade infrastructure in the eastern subcontinent (India–Nepal–Bangladesh) and Himalayan corridors can raise productivity for Indian manufacturers and farmers alike. The SCO platform makes it easier for New Delhi and Beijing to co-fund “small and beautiful” cross-border projects that de-risk supply chains without securitizing every kilometre of road.
Context matters. Washington’s new 50 percent tariff rates on most Indian imports—a punitive response to India’s discounted Russian oil purchases—arrived days before Tianjin. That move, accompanied by contradictory rhetoric (from threats to boasts that India might cut tariffs to zero), underlines a familiar imperial privilege: partners are expected to align with U.S. strategic preferences while absorbing trade shocks that undermine their own policy autonomy.
From New Delhi’s vantage point, this is not how collaboration looks; it resembles coercive policy conditionality. India and the U.S. will keep negotiating—Commerce Minister Piyush Goyal has said as much—but the tariff episode reinforces a structural lesson: hedging is rational, and over-reliance on any single bloc—Western or otherwise—exposes India’s industrial policy to external vetoes. The SCO/BRICS lane gives India bargaining power it simply wouldn’t possess as a junior partner.
From a developmentalist perspective, India–China cooperation is not an ideological indulgence; it’s a growth strategy. Consider three concrete channels:
Industrial upgrading: India’s path to moving up value chains in electronics, EVs, and capital goods cannot be built on asset-light assembly alone. Selective, rules-of-origin-tight Chinese FDI/tech partnerships, when paired with local content and standards, can accelerate domestic supplier ecosystems—exactly the value-addition challenge India has struggled with under production linked Incentive (PLI). Pragmatic engagement, not blanket bans, delivered East Asia’s manufacturing rise. (This is a policy logic; the Tianjin mood makes it politically easier to execute.)
Trade facilitation and logistics: A serious reset—backed by SCO connectivity finance—can unclog border trading points, standardize phytosanitary rules, and reduce freight times on Bay of Bengal–Himalayan corridors. That pays dividends to Indian MSMEs as surely as it helps Chinese exporters.
Knowledge and people flows: Direct flights and eased visas revive university, think-tank, and business exchanges that feed innovation (AI, biotech, green tech). After years of demonization—and mutual ignorance—structured contact is the cheapest confidence-building measure available.
Managing differences, not denying them
The LAC remains sensitive. That is precisely why redundant communications channels—corps-commander talks, WMCC, and SR-level dialogue—must keep running on schedule, insulated from media theatrics. The October 2024 patrolling/disengagement understanding did not “solve” the boundary, but it showed sequenced technical fixes are possible when politicians keep lines open. The Tianjin meeting reaffirmed that border issues should not define the totality of the relationship.
On trade, Modi reportedly pressed to narrow the deficit and expand market access; Xi emphasized de-securitizing commerce and focusing on development. Neither side will get everything it wants, but both now acknowledge that managed interdependence is better than brittle decoupling that hurts growth and jobs.
The Tianjin SCO was bookended by China’s 80th-anniversary anti-fascist commemorations in Beijing on 3 September, with many world leaders attending. Whatever one thinks of Beijing’s historical narrative, the symbolism is clear: regional security should be regionalized, and Asia will not cede agenda-setting to trans-Atlantic alliances. Donald Trump did not attend this commemoration, despite earlier speculation, which underscores how Eurasian coordination increasingly proceeds on its own timetable.
For India, the peace dividend is internal: relief for the exchequer, oxygen for industrial policy, and room to address agrarian distress, urban employment, and climate adaptation at home. For China, it is external: a less securitized periphery that allows a focus on high-quality growth and technology goals. For South Asia, easing India–China rivalry reduces coercive hedging pressures on Nepal, Bangladesh, Sri Lanka, and Pakistan, and opens space for trade-led poverty reduction. This is how Global South multilateralism becomes material—through cheaper credit, faster logistics, and predictable rules—rather than a slogan.
Indian and international media often swing between alarmist “China threat” frames and rosy “reset” headlines. A class-conscious reading avoids both. It recognizes how border nationalism can be used domestically to obscure distributional conflicts; it also recognizes how corporate media ownership can amplify Western talking points that press India toward security-heavy alignments inimical to industrial deepening. In this view, dialogue with Beijing is not about sentimentality; it is about bargaining power for workers and producers in the Indian economy.
Strategic autonomy in practice
Tianjin does not end competition. It disciplines it. India will—must—modernize and diversify supply chains, and press on market access. China will protect its core interests and its ties with its neighbouring countries. But between structured rivalry and unstructured hostility, only the former keeps peace, stability, and development within reach.
The U.S. tariff shock is a reminder that alignment is not insurance. The SCO/BRICS lane—with a potential SCO bank, revived border trade, and flight links—offers India and China a way to institutionalize predictability while each pursues national priorities. That is multilateralism with teeth, not performative non-alignment.
To paraphrase an old metaphor, it is better for the elephant to dance with the dragon—warily, on rules the elephant helps set—than to serve as a junior partner in someone else’s orchestra. The Tianjin summit and the Modi–Xi meeting reopened channels that can cool the border, restart the arteries of commerce, and anchor multipolar institutions that the Global South has demanded for decades. The task ahead is to turn those headlines into hard-edged policy: time-bound SR meetings, transparent aviation and visa timelines, a concrete SCO banking workplan, and a measurable road-map on trade and investment that raises Indian value-addition while normalizing ties.
Peace is not sentimental; it is planned. The elephant and the dragon have finally agreed to plan it together.
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This article was produced by Globetrotter. Atul Chandra is a researcher at Tricontinental: Institute for Social Research. His areas of interest include geopolitics in Asia, left and progressive movements in the region, and struggles in the Global South
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